Finance Act 2013 (c. 29)

SCHEDULES

SCHEDULE 25 U.K. Charge on certain high value disposals by companies etc

PART 1 U.K. Taxation of Chargeable Gains Act 1992

4 U.K. After section 2 insert—

“2B Persons chargeable to capital gains tax on ATED-related gains

(1) A person (other than an excluded person) (“P”) is chargeable to capital gains tax in respect of any ATED-related chargeable gain accruing to P in a tax year on a relevant high value disposal.

(2) A person is “excluded” if the person is an individual, the trustees of a settlement or the personal representatives of a deceased person and—

(a) the gain accrues on a disposal of any partnership assets and the person is a member of the partnership, or

(b) the gain accrues on a disposal of any property held for the purposes of a relevant collective investment scheme and the person is a participant in relation to the scheme.

(3) Capital gains tax is charged on the total amount of ATED-related chargeable gains accruing to P in the tax year on relevant high value disposals, after deducting ring-fenced ATED-related allowable losses in relation to that year.

(4) Subsections (5) to (7) apply in relation to an ATED-related allowable loss accruing to P in a tax year on a relevant high value disposal.

(5) The loss is not allowable as a deduction from ATED-related chargeable gains accruing in any earlier tax year on relevant high value disposals.

(6) Relief is not to be given under this Act more than once in respect of the loss or any part of the loss.

(7) Relief is not to be given under this Act in respect of the loss if, and so far as, relief has been or may be given in respect of it under the Tax Acts.

(8) The only deductions which can be made from ATED-related chargeable gains are those permitted by this section.

(9) See section 57A and Schedule 4ZZA for how to compute—

(a) the ATED-related gain or loss accruing on a relevant high value disposal, and

(b) the gain or loss accruing on a relevant high value disposal which is not ATED-related.

(10) In this section—

• “participant”, in relation to a relevant collective investment scheme, is to be read in accordance with section 235 of the Financial Services and Markets Act 2000;

• “relevant collective investment scheme” means a collective investment scheme within the meaning of Part 17 of that Act (see section 235 of that Act) other than—

  (a)

  a unit trust scheme within the meaning of that Part (see section 237(1) of that Act), or

  (b)

  an open-ended investment company within the meaning of that Part (see section 236(1) of that Act);

• “ring-fenced ATED-related allowable losses”, in relation to a tax year, means—

  (a)

  any ATED-related allowable losses accruing to P in the tax year on relevant high value disposals, and

  (b)

  so far as they have not been allowed as a deduction from ATED-related chargeable gains accruing in any previous tax year on relevant high value disposals, any ATED-related allowable losses accruing to P in any previous tax year (not earlier than the tax year 2013-14) on such disposals.

2C “Relevant high value disposal”

(1) A disposal on which a gain or loss accrues to P is a “relevant high value disposal” if conditions A to D are met.

(2) Condition A is that the disposal is of the whole or part of a chargeable interest (“the disposed of interest”).

(3) Condition B is that the disposed of interest has, at any time during the relevant ownership period, been or formed part of a single-dwelling interest.

(4) Condition C is that—

(a) P, or

(b) if the disposed of interest is a partnership asset, the responsible partners, or

(c) if the disposed of interest is held for the purposes of a relevant collective investment scheme, the person who has day-to-day control over the management of the property subject to the scheme,

has or have been within the charge to annual tax on enveloped dwellings with respect to that single-dwelling interest on one or more days in the relevant ownership period which are not relievable days in relation to the interest.

(5) Condition D is that the amount or value of the consideration for the disposal exceeds the threshold amount (see section 2D).

(6) In this section and section 2D—

• “chargeable interest” has the same meaning as in Part 3 of the Finance Act 2013 (annual tax on enveloped dwellings) (see section 107 of that Act (chargeable interest));

• “dwelling” has the same meaning as in that Part (see section 112 of that Act);

• “relevant collective investment scheme” has the same meaning as in section 2B;

• “the relevant ownership period” means the period which begins—

  (a)

  if an election has been made under paragraph 5 of Schedule 4ZZA, with the day on which P acquired the chargeable interest or, if later, 31 March 1982, and

  (b)

  in any other case, with the day on which P acquired the chargeable interest or, if later, 6 April 2013,

  and ends with the day before the day on which the disposal occurs;

• “relievable day” means a day which is “relievable” by virtue of any of the provisions mentioned in section 132 of the Finance Act 2013 (ATED: effect of reliefs) and in respect of which a claim has been made under section 106(3) of that Act;

• “the responsible partners” has the same meaning as in section 96 of that Act;

• “single-dwelling interest” has the same meaning as in Part 3 of that Act;

and a reference to being “within the charge” to annual tax on enveloped dwellings with respect to a single-dwelling interest is to be read in accordance with section 170(2) of that Act.

(7) For the purposes of Condition C—

(a) Part 3 of the Finance Act 2013 applies, in relation to any part of the relevant ownership period falling before 1 April 2013, as if section 94(8)(a) of that Act (first chargeable period for ATED) read “the period beginning with 31 March 1982 and ending with 31 March 1983”, and

(b) when determining whether any day falling before 1 April 2013 is a relievable day, the definition of “relievable day” in subsection (6) above is to read as if the words “and in respect of which a claim has been made under section 106(3) of that Act” were omitted.

2D “The threshold amount”

(1) This section applies to determine “the threshold amount” in relation to a disposal which meets Conditions A to C in section 2C (“the current disposal”).

(2) If—

(a) the current disposal is not a part disposal of an asset, and

(b) P has not made any relevant related disposals,

the threshold amount is £2 million, subject to subsection (5) (joint interests).

(3) If paragraphs (a) and (b) of subsection (2) do not both apply, the threshold amount is the relevant fraction of £2 million, subject to subsection (5) (joint interests).

(4) “The relevant fraction” is—

where—

“C” is the amount or value of the consideration for the current disposal;

“TMV” is what would be the market value, at the time of the current disposal, of a notional asset comprising—

(a)

the disposed of interest (see section 2C(2)),

(b)

if the current disposal is a part disposal, any part of the chargeable interest held by P that remains undisposed of immediately following that part disposal,

(c)

any chargeable interest (or part of a chargeable interest) which was the subject of a relevant related disposal, and

(d)

any chargeable interest (or part of a chargeable interest) held by P at the time of the current disposal which, if P had disposed of it at that time, would have been the subject of a relevant related disposal.

(5) If the disposed of interest is a share of the whole of—

(a) a chargeable interest, or

(b) a part of a chargeable interest,

subsections (2) and (3) have effect as if the references to “£2 million” were to the joint share fraction of that amount.

(6) The joint share fraction is the fraction of the whole of the chargeable interest or part represented by the disposed of interest.

(7) “Relevant related disposal”, in relation to the current disposal, means any disposal by P which—

(a) meets Conditions A to C in section 2C in circumstances where the single-dwelling interest referred to in Condition C is—

(i) the single-dwelling interest by virtue of which Condition C is met in relation to the current disposal, or

(ii) another single-dwelling interest in the same dwelling as that interest, and

(b) was made in the period of 6 years ending with the day on which the current disposal occurs, but not before 6 April 2013.

2E Restriction of losses

(1) This section applies where (ignoring this section)—

(a) a disposal would be a relevant high value disposal, but for a failure to meet condition D in section 2C,

(b) if it were a relevant high value disposal, an ATED-related loss would accrue to a person (other than an excluded person) in a tax year on the disposal, and

(c) the total of the sums allowable as a deduction under section 38 in relation to the disposal exceeds the threshold amount in relation to the disposal.

(2) For the purposes of this Act—

(a) the disposal is to be treated as a relevant high value disposal (and section 57A and Schedule 4ZZA apply accordingly), and

(b) the ATED-related loss which accrues on the disposal is to be restricted to the amount which would have been that loss had the consideration for the disposal been £1 greater than the threshold amount in relation to the disposal.

(3) In a case where paragraph 2 of Schedule 4ZZA applies (calculation of gains or losses on disposals of assets held on 5 April 2013), the reference in subsection (1)(c) to the disposal is to be read as a reference to the notional disposal referred to in paragraph 3(2) of that Schedule (disposal on which notional post-April 2013 gain or loss accrues).

(4) Nothing in subsection (2)(b) restricts any loss which is not ATED-related, or affects any gain (whether or not ATED-related), accruing on the relevant high value disposal.

(5) In this section—

• “excluded” has the meaning given by section 2B(2);

• “the threshold amount” has the meaning given by section 2D.

2F Tapering relief for gains

(1) This section applies to an ATED-related gain which accrues on a relevant high value disposal and is chargeable to capital gains tax by virtue of section 2B.

(2) There is excluded from the gain so much of it as exceeds five-thirds of the difference between—

(a) the amount or value of the consideration, and

(b) the threshold amount (within the meaning of section 2D) in relation to the disposal.

(3) But where the relevant fraction is less than 1, subsection (2) has effect as if the amount determined under that subsection were the relevant fraction of that amount.

(4) “The relevant fraction”—

(a) in a case where the ATED-related gain is determined in accordance with paragraph 3 of Schedule 4ZZA, has the meaning given by paragraph 3(4) of that Schedule, and

(b) in a case where the ATED-related gain is determined in accordance with paragraph 6 of that Schedule, has the same meaning as in paragraph 6(5)(a) of that Schedule.

(5) Nothing in this section restricts any gain which is not ATED-related, or affects any loss (whether or not ATED-related), accruing on the relevant high value disposal.”